Toho Gas Q1 Operating Profit Slides 62% to ¥7.64 Billion as Revenue Falls 10% on Lower Gas Prices

Toho Gas Co., Ltd. (TSE: 9533), Japan's third-largest city-gas utility and the dominant supplier to the Chubu region around Nagoya, reported consolidated first-quarter results for the three months to June 30, 2026 under Japanese GAAP. Revenue fell 10.3% to ¥144,849 million, operating profit dropped 61.5% to ¥7,640 million, ordinary profit fell 52.0% to ¥10,573 million, and net profit attributable to owners of the parent declined 43.3% to ¥9,424 million. Basic earnings per share were ¥26.19, against ¥43.07 a year earlier.

Margins normalise after a strong year

The steep percentage declines are measured against an exceptionally strong year-earlier quarter, when operating profit rose 30.3% to ¥19,840 million on revenue up 10.5% to ¥161,470 million. City-gas rates in Japan are reset through a raw-material cost adjustment mechanism that passes LNG and crude price moves through to customers with a lag of several months. In the April–June 2025 quarter that timing gap worked strongly in Toho Gas's favour, producing unusually wide spreads between selling rates and procurement costs. Those spreads have now unwound. Lower pass-through gas prices also mechanically reduced the top line, accounting for much of the 10.3% revenue decline even where sales volumes held up.

Four-for-one stock split

Toho Gas executed a four-for-one split of its common stock effective April 1, 2026. All per-share figures are restated accordingly, with the prior-year quarter presented as if the split had taken place at the start of that year — which is why reported EPS of ¥26.19 compares with a restated ¥43.07 rather than the pre-split figure. The company's FY3/2027 dividend forecast is ¥11.25 interim plus ¥11.25 year-end, or ¥22.50 for the full year on a post-split basis. FY3/2026 paid ¥45 interim and ¥45 year-end for ¥90 annually on a pre-split basis, equivalent to ¥22.50 after the four-for-one adjustment — so the shareholder payout is effectively unchanged. There is no change from the previously announced forecast.

Comprehensive income diverges from net profit

Comprehensive income moved in the opposite direction to the income statement, rising 153.6% to ¥29,117 million from ¥11,483 million, driven by valuation gains on securities holdings even as net profit fell 43.3%. That flowed through to the balance sheet: total assets rose to ¥833,021 million at June 30, 2026 from ¥809,459 million at the March year-end, while net assets increased to ¥495,569 million from ¥477,519 million. Shareholders' equity stood at ¥495,072 million and the equity ratio edged up to 59.4% from 59.0%, leaving the utility with one of the sturdier balance sheets in the sector.

Full-year guidance kept

Management left its FY3/2027 forecast unchanged, guiding revenue of ¥670,000 million (+2.9%), operating profit of ¥19,000 million (−40.2%), ordinary profit of ¥25,000 million (−34.0%) and net profit of ¥23,000 million (−26.9%), with EPS of ¥64.24. The full-year plan already assumes a sharp step down from FY3/2026's elevated earnings, and the first quarter alone delivered about 40% of the full-year operating-profit target — broadly in line with the seasonal profile of a gas utility, whose earnings are weighted toward the heating-demand quarters.

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